1. When spouses share an equal right to use and to possess a
car, with neither spouse having a superior or exclusive
right of control over the car, no action for negligent
entrustment arises.

2. To establish fraudulent conveyance, one must generally prove
two things. First, the grantor must be shown to have
intended to hinder, delay, or defraud his or her creditors.
Second, the grantee must be shown to have participated in or
have constructive or actual knowledge of the fraudulent
scheme.

3. An approved property settlement agreement in a domestic
proceeding does not bar creditors from attacking the
agreement as fraudulent when they claim the agreement was
entered into to hinder, delay, or defraud them.

GREEN, J.: Rachel K. Snodgrass appeals from a summary
judgment granted in favor of Betty D. Baumgart and her husband,
Raymond M. Baumgart. Snodgrass was injured in a car accident
involving Betty. Snodgrass sued Betty for damages and later
amended her action to include a claim for fraudulent conveyance
of assets. Snodgrass also sued Raymond for negligent entrustment
and fraudulent conveyance. The trial court granted summary
judgment to Betty and Raymond on Snodgrass' claims of fraudulent
conveyance. The trial court also granted summary judgment to
Raymond on Snodgrass' claim of negligent entrustment.

On appeal, Snodgrass contends that the trial court
inappropriately granted summary judgment to Raymond on her
negligent entrustment claim. We disagree, holding that no
negligent entrustment occurred when Raymond did not have a
superior or exclusive right of control over the car. Snodgrass
also contends that the trial court inappropriately granted
summary judgment to Raymond and Betty on her fraudulent
conveyance claims. We agree. Accordingly, we affirm in part,
reverse in part, and remand for trial on the fraudulent
conveyance claims.

When a car driven by Betty collided with a car in which
Snodgrass was a passenger, Snodgrass received severe injuries
requiring several weeks of hospitalization. Betty later pled no
contest to one count each of aggravated battery and driving while
under the influence of alcohol.

On May 5, 1995, Snodgrass sued Betty for negligence. The
petition was personally served on Betty on May 10, 1995. One day
later, Raymond sued Betty for divorce. Betty and Raymond later
entered into a separation and property settlement agreement which
was approved by a different trial judge. They were divorced in
early June 1995.

In February 1996, Snodgrass amended her petition to include
a claim against Raymond for negligent entrustment. It also
included a claim against Betty and Raymond for fraudulent
conveyance relating to the property settlement.

Snodgrass first argues that the trial court inappropriately
granted summary judgment to Raymond on her negligent entrustment
claim. In her suit against Betty and Raymond, Snodgrass claimed
that Raymond negligently supplied Betty with the car, which he
knew she was incapable of driving with ordinary care. Snodgrass
alleged that Raymond was negligent because Betty was intoxicated
when he entrusted her with the car. The trial court noted that
Betty and Raymond were husband and wife at the time of the
accident. Further, they co-owned the car involved in the
accident. The trial court ruled Raymond could not, as a matter
of law, be held liable for negligently entrusting the co-owned
car and granted summary judgment in his favor.

Summary judgment is appropriate when the pleadings,
depositions, answers to interrogatories, and admissions on file,
together with the affidavits, if any, show there is no genuine
issue as to any material fact and that the moving party is
entitled to judgment as a matter of law. The trial court is
required to resolve all facts and inferences which may reasonably
be drawn from the evidence in favor of the party against whom the
ruling is sought. When opposing a motion for summary judgment,
an adverse party must come forward with evidence to establish a
dispute as to a material fact. In order to preclude summary
judgment, the facts subject to the dispute must be material to
the conclusive issues in the case. On appeal, we apply the same
rules, and where we find reasonable minds could differ as to the
conclusions drawn from the evidence, summary judgment must be
denied. Saliba v. Union Pacific R.R. Co., 264 Kan. 128, 131-32,
955 P.2d 1189 (1998).

This case is distinguishable from several other well-recognized negligent entrustment
cases. See Fogo,
Administratrix, v. Steele, 180 Kan. 326, 304 P.2d 451 (1956);
Richardson v. Erwin, 174 Kan. 314, 255 P.2d 641 (1953); Priestly
v. Skourup, 142 Kan. 127, 45 P.2d 852 (1935). All three of these
cases involved a situation where an owner of a car loaned the car
to someone whom the lender knew was an incompetent, careless, and
reckless driver. The lender in those cases had a superior right
of control over the car. Here, Raymond and Betty were joint
owners of the car involved in the collision. As a result,
neither Raymond nor Betty enjoyed a superior right of control
over the car.

McCart examined whether a father could be held liable for
negligent entrustment where he permitted his minor son to drive a
car he and his son jointly owned. In McCart, the son, while
driving the car, was involved in an accident which resulted in
multiple fatalities. The evidence indicated the son had been
involved in numerous accidents, had received several citations
for moving violations, and had been convicted of reckless driving
a few days before the accident.

In determining that the evidence produced at trial
established the father was liable for negligent entrustment, our
Supreme Court stated:

"Under the evidence all elements of liability for negligent entrustment
were shown: (1) The father, as co-signer on the automobile finance papers
and as co-owner on the certificate of title, was instrumental in furnishing
the motor vehicle to his son, Stephen, (2) the father knew or should have
known Stephen was an incompetent driver, and (3) the negligence of Stephen in
operating the vehicle was a cause of the damages.

"Stephen was not an emancipated child. He remained under the control of
his parents. The automobile was being operated with the permission of the
father." 230 Kan. at 621.

In minimizing the joint ownership issue in this case, McCart
stressed the control that the father had over his son. The
McCart court pointed out that although the father and the son
were joint owners of the car, the father was "instrumental in
furnishing" the car to his son. 230 Kan. at 621. The court
further noted that the son was a minor and was not emancipated.
The court stated that the son remained under the control of his
parents. Consequently, the court concluded that the son was
operating the car with his father's permission.

Nevertheless, because Betty and Raymond were joint owners of
the car and were entitled to equal use and possession of the car,
the essential control factor is missing in this case. The
control factor has been emphasized in the Restatement (Second) of
Torts.

"One who supplies directly or through a third person a chattel for the
use of another whom the supplier knows or has reason to know to be likely
because of his youth, inexperience, or otherwise, to use it in a manner
involving unreasonable risk of physical harm to himself and others whom the
supplier should expect to share in or be endangered by its use, is subject to
liability for physical harm resulting to them." Restatement (Second) of Torts
§ 390 (1964).

In comment b following this section, it is noted that § 390 is a
special application of § 308. Section 308 states:

"It is negligence to permit a third person to use a thing . . . which is
under the control of the actor, if the actor knows or should know that such
person intends or is likely to use the thing . . . in such a manner as to
create an unreasonable risk of harm to others." Restatement (Second) of Torts
§ 308 (1964).

Furthermore, comment a of § 308 states:

"The words 'under the control of the actor' are used to indicate that
the third person is entitled to possess or use the thing . . . only by the
consent of the actor, and that the actor has reason to believe that by
withholding consent he can prevent the third person from using the thing or
engaging in the activity."

Because Betty shared an equal right to use and to possess
the car with her husband, Raymond, no negligent entrustment could
occur. Raymond lacked a superior or exclusive right of control
over the car.

Other courts that have visited this issue have determined
that a negligent entrustment action will fail where a car is co-owned by spouses or a parent and
adult child. In Zedella v.
Gibson, 165 Ill.2d 181, 650 N.E.2d 1000 (1995), the court
examined a negligent entrustment action against the father of a
23-year-old son, with whom he co-owned a car. The court, relying
in part on the Restatement (Second) of Torts § 308 and the
comment following, determined that no negligent entrustment could
occur where the actor did not have a superior or exclusive right
of control over the car.

In Neale v. Wright, 322 Md. 8, 585 A.2d 196 (1991), the
court evaluated a negligent entrustment action brought against a
woman whose husband was involved in an accident in their co-owned
car where the husband was excluded from the automobile insurance
policy. The court rejected the argument that the wife entrusted
the car to her husband. She had no power to prohibit him from
using the vehicle. The Neale court distinguished the case from
the McCart case on the basis that the McCart case involved a
parent-child relationship and not a spousal relationship. As a
result, Snodgrass' argument fails.

Next, Snodgrass argues that the trial court inappropriately
granted summary judgment to Raymond and Betty on her fraudulent
conveyance claims. Snodgrass contends that under Betty and
Raymond's separation and property settlement agreement, Raymond
received the bulk of their assets and Betty was left with
negligible assets.

Snodgrass sued Betty on May 5, 1995. On May 10, 1995, Betty
was personally served with Snodgrass' suit. On May 11, 1995,
Raymond filed a petition for an emergency divorce. On May 24,
1995, Betty and Raymond entered into a property settlement
agreement.

The property settlement awarded Raymond the following: all
farm equipment and tools; all livestock; a 1988 Ford pickup
truck; built-in household appliances; all financial accounts in
Raymond's name; his personal effects; an 80 acre tract of land; a
60 acre tract of land; and a 160 acre tract of land and the
residence thereon. Betty was awarded: 82 shares of Kroger
stock; her Kroger retirement and benefit accounts; 168 shares of
Mercantile Bank stock; her retirement and benefit accounts with
Mercantile Bank; all household furnishings not built in (valued
at several thousand dollars); all financial accounts in her name
(valued at $500); and her personal effects. In addition Raymond
agreed to pay Betty $500 a month until he had paid her $10,000.

Before the divorce, Raymond prepared a domestic relations
affidavit. He listed his monthly income as an $18,000 loss. The
affidavit indicated liabilities in the amount of $250,000 and
assets in the amount of $22,253 for a negative net worth of
$227,747. However, late in 1993, Betty and Raymond reported on a
financial statement a positive net worth of approximately
$423,960. In 1996, Raymond reported on a financial statement a
positive net worth of approximately $385,904.

On June 8, 1995, Raymond told his banker the divorce was
final. Raymond also requested that Mercantile Bank acquire a
mortgage on the 60-acre and 80-acre tracts of land which were not
subject to any previous mortgages. Although the reasons for
these mortgages are disputed, no new loan was made at the time
the mortgages were taken.

The trial court noted that the property settlement was
deemed by another judge to be "'fair, just and equitable.'" The
trial court observed that district court proceedings are entitled
to a presumption of regularity. Based on that, the trial court
determined that absent a showing to the contrary, the journal
entry approving the property settlement agreement is final and
conclusive as to the issues involved.

Next, the trial court determined that Snodgrass did not
present evidence that would suggest that any of the property
awarded to Raymond would have been subject to execution. The
trial court reasoned that the "majority" of property awarded to
Raymond was already subject to liens of creditors or was
statutorily exempt. Finally, the trial court stated Snodgrass
produced no evidence suggesting the divorce was entered into in
an effort to transfer assets out of the reach of Snodgrass. The
trial court relied on the fact that the petition for divorce was
signed 1 day before the civil suit and that Betty signed an entry
of appearance in the divorce action on the same day.

To establish fraudulent conveyance, one must generally prove
two things. First, the grantor must be shown to have intended to
hinder, delay, or defraud his or her creditors. Second, the
grantee must be shown to have participated in or have
constructive or actual knowledge of the fraudulent scheme. City
of Arkansas City v. Anderson, 15 Kan. App. 2d 174, 180, 804 P.2d
1026, rev. denied 248 Kan. 994 (1991).

Our Supreme Court has recognized six badges or indicia of
fraud:

"'(1) a relationship between the grantor and grantee; (2) the grantee's
knowledge of litigation against the grantor; (3) insolvency of the grantor;
(4) a belief on the grantee's part that the contract was the grantor's last
asset subject to a Kansas execution; (5) inadequacy of consideration; and (6)
consummation of the transaction contrary to normal business procedures.'"
Koch Engineering Co. v. Faulconer, 239 Kan. 101, 105, 716 P.2d 180 (1986)
(quoting Credit Union of Amer. v. Myers, 234 Kan. 773, 778, 676 P.2d 99
[1984]).

Although the trial court determined that since the property
settlement agreement was "'fair, just and equitable,'" this
precluded Snodgrass from attacking the property settlement as
fraudulent, we disagree. The property settlement determined how
the marital estate would be divided. Although the property
agreement was binding between Betty and Raymond, the agreement
was not immune from an attack by a creditor such as Snodgrass.
Because Snodgrass claimed that the property agreement was entered
into to hinder, delay, or defraud her, the earlier domestic
proceeding offered no protection from such a challenge.

Next, we turn our attention to whether any evidence existed
that Betty and Raymond's actions were fraudulent. Betty and
Raymond were married to one another when they entered into the
property settlement agreement. The evidence suggests Betty and
Raymond may have known or anticipated Snodgrass' law suit. As
early as April, Snodgrass' attorney made a formal demand to Betty
and Raymond's insurance company for policy limits. Furthermore,
the civil suit was filed by Snodgrass before the divorce action
was filed.

Betty's assets dramatically decreased as a result of the
property settlement. The acreage and residence alone has been
valued at approximately $266,000. Livestock owned by Raymond
has been valued at $124,392. Betty gained very few assets as a
result of the property settlement agreement. Raymond maintained
ownership over the majority of the marital assets. As a result,
the trial court erred in granting summary judgment on the
fraudulent conveyance claims.